Healthy, Wealthy, Wise

By |2018-09-11T22:39:31+00:00September 11th, 2018|Global Market Update|

What are you doing to stay healthy? Photo: JD Maidens. Source: US Air Force Our bodies and our finances are linked, and not just because of how much we spend on prescriptions. Health is integral to our lives, the same way money is. And studying finance is similar to studying medicine: there are technical issues that require specialized training, but most of the principles are pretty basic. Stay active, eat well, and get enough rest. Financially, spend less than we earn, have clear goals, [...]

The Only Game in Town?

By |2018-05-23T06:28:00+00:00May 23rd, 2018|Global Market Update|

Should we invest in monopolies? Photo: Matthew Hull. Source: Morguefile A monopoly exists when a company is the only provider of what we need. The electric company in your area is the only way to get electricity for your home. The cable or phone company is the only way to get high-speed internet service. Companies that enjoy a huge market share have one less thing – one big thing – to worry about. They don’t have to worry about what the competition will do [...]

Moving the World

By |2017-10-17T08:24:21+00:00October 17th, 2017|Global Market Update|

Archimedes was right. Source: Wikipedia. “Give me a lever and a place to stand and I shall move the earth.” That’s what Archimedes said when describing the advantage that leverage gives. Force times distance on one side of the fulcrum equals force times distance on the other side. That’s how you can lift a hundred pound weight with only five pounds of push – if the distance on one side is twenty times that of the other. Of course, this only works if the [...]

Dividend Aristocracy?

By |2017-07-17T12:21:29+00:00February 7th, 2017|Global Market Update|

They were the best of yields, they were the worst of yields … French Aristocracy. Remember what happened to them? Public Domain. Source: Wikipedia In an environment where short-term interest rates are barely moving up and bonds are exposed to rising inflation, many investors have turned to dividend-paying stocks to provide income for their portfolios. Many blue-chip companies yield more than 3%. How risky can such a strategy be? There’s a lot to like about dividends. They are the most transparent part of a [...]

The Importance of Small

By |2017-07-17T12:21:44+00:00September 9th, 2016|Global Market Update|

Do small stocks outperform? Comparison of S&P Small Cap and Large Cap indices. Source: Bloomberg On its face, this seems like a silly question. Everyone “knows” that small cap stocks outperform. Since 2000, small caps have grown over 4 times, while large cap shares have only doubled. There’s a 5% annuallized difference between the S&P 500 and the S&P 600 small cap index. Over longer time frames this relationship seems to hold up as well. From 1926 to 2015, small cap stocks returned 11.3% [...]

Alpine Meadows

By |2017-07-17T12:21:57+00:00May 23rd, 2016|Global Market Update|

What comes to mind when you think of the Alps? Photo: Kevin Connors. Source: Morguefile Maybe it’s clear mountain lakes and crystal blue skies. Maybe it’s sun and snow and skiing. Or maybe it’s money? A map of Europe scaled by per-capita GDP reveals an interesting tendency: the areas with the most mountainous topography tend to have higher incomes. Northern Italy, western Austria, southern Germany, and Switzerland are all significantly richer than other regions. This holds true despite differences in taxation, culture, transport, and [...]

Wagging the Dog

By |2017-07-17T12:22:08+00:00February 16th, 2016|Global Market Update|

Wagging the Dog Where does finance fit into the economy? Photo: David Whelan. Source: Morguefile Time was that the real economy was considered the dog and the financial economy the tail. Except for an occasional bubble, the tail didn’t wag the dog. What people ate and how they dressed was critical; how the saved and where they invested wasn’t. Now it’s not so clear. The world produced about $80 trillion in goods and services in 2015. At the same time, public and private markets [...]

Investments, Finance, and Robo-Advisers

By |2017-07-17T12:22:43+00:00June 25th, 2015|Global Market Update|

What’s the best investment plan? Photo: Andreas Praefcke. Source: Wikipedia Lots of people ask for investment advice. They need help managing their money. They talk about the stock market or bank rates. But what they really need is financial guidance. Classically, finance has three major reports: income, assets, and cash flow. Each of these areas has inflows and outflows—positive and negative entries. An income statement covers income and expenses; a balance sheet shows assets and liabilities; with cash flow there are inflows and outflows. [...]

Long Term, Short Term, Borrowed Term

By |2017-07-17T12:22:46+00:00May 27th, 2015|Global Market Update|

Remember Long Term Capital Management? Source: Pixabay Twenty years ago a couple of traders teamed up with some Nobel Prize winners to create an investment company premised on the notion that similar things act similarly—that in the long run, finance obeys rational rules. Small differences in price can be understood and used to create financial returns. […]

Balancing the Books (Part 1)

By |2017-07-17T12:23:05+00:00January 30th, 2015|Global Market Update|

What is a balance sheet? Source: Digital Juice A balance sheet is a financial statement that lists all your assets and liabilities—what you own and what you owe. It’s a fundamental part of finance. It’s an accounting ledger that lists, on one side, what you are doing with your money, and on the other side, where the money came from. It’s a snapshot at a point in time. Everyone and everything that deals with money has a balance sheet: families, businesses, governments—even central banks. [...]